As covered in the previous heading, sundry debtors are shown in the company’s balance sheet as “assets”; therefore, they are an asset for the business. These amounts are recorded as assets because they represent a future economic benefit that is expected to be received by the company. The journal entry debits the inventory or the purchases and credits the accounts payable or creditors, being a current liability. Creditors or ‘payables’ are customers to which the company owes funds. The company has purchased goods on credit and payments are yet to be made to them. Sundry creditors, also known as ‘sundry payables’ refer to a company’s suppliers from whom the company rarely make purchases on credit and the amounts purchased from them are not significant.

• As per the golden rules of accounting, Sundry Debtor a/c is a personal account.
• Understand the definition of accounts receivable, look at different types of accounts receivable, and examine examples.
• With the efficiency and low cost of today’s accounting systems, the need for classifying customers and accounts as sundry has been eliminated.
• Creditors being a liability have a credit balance in Accounts.
• The company has purchased goods on credit and payments are yet to be made to them.

The term ‘Debtor’ refers to a person or entity that owes money to your business for goods or services sold on credit. A group of such individuals or entities is called Sundry Debtors. They may also be referred https://kelleysbookkeeping.com/what-does-net-30-mean-on-an-invoice-a-simple/ to as accounts receivable or trade receivables. Obviously, sundry debtors are the most common terms used in the accounting realm. Sundry Debtors are an integral part of the current asset sector.

What is the Journal Entry for Closing Stock?

Sundry debtors are also referred to as accounts receivable. ‘Debtors’ refer to people or businesses who owe you money for goods or services provided on credit. Therefore, QRT Ltd. will become a debtor for Wood Ltd., whereas Wood Ltd. will become a creditor for QRT Ltd. With the efficiency and low cost of today’s accounting systems, the need for classifying customers and accounts as sundry has been eliminated. Learn what accounts receivables are and why they’re important. Understand the definition of accounts receivable, look at different types of accounts receivable, and examine examples.

Usually, the company maintains separate ledger accounts to record business transactions for each customer. This is justifiable if the customer purchases in larger volumes at frequent intervals. What Do Sundry Creditors And Sundry Debtors Mean? This may not be justifiable for smaller customers, thus it is more convenient to maintain a single ledger account named ‘sundry debtors’ to record such small scale infrequent transactions.

Summary – Sundry Debtors vs Sundry Creditors

In addition, it is the phenomenon where the customer has to owe money to the business. Creditors being a liability have a credit balance in Accounts. All credit purchases made during the year should be credited to the Creditors Account, showing an increase in the creditors’ balance. On the other hand, all transactions such as payment to a creditor, purchase returns, etc. that reduces the creditors’ balance should be debited.

• They have purchased goods on credit and, payments are yet to be made by them.
• It cannot be a liability because in order for it to be a liability, there must be a pending outflow of money that is supposed to happen in the future.
• E.g. The above purchase will be recorded as follows in the books of PQR since Company C is a sundry creditor.
• Suppose “Daniel Constructions” sold building material worth 60,000 to “Axis Housing” on credit, and Axis Housing (buyer) agrees to pay the related invoices in the future accounting period.
• Sundry Creditors are the trade payables who comes under the current liability.